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Cyclical and structural variation in resource allocation: evidence for Europe

Eric Bartelsman (), Lopez-Garcia, Paloma and Giorgio Presidente

No 2210, Working Paper Series from European Central Bank

Abstract: This paper uses cross-country micro-aggregated data on firm dynamics and productivity from the ECB CompNet database to provide empirical evidence on factor reallocation in the European Union (EU). The analysis finds that reallocation is towards more productive firms although the magnitude varies across countries and over time. Variation in reallocation is related to structural differences in firm size distribution across countries as well as to variation in labor and product market institutions. Productivity-enhancing reallocation generally rises in downturns but, similar to findings for the US, it did not pick up in the Great Recession. The sharp drop in exports and tightness in credit markets are seen to provide a partial explanation for this lack of a silver lining. JEL Classification: E24, E32, J63, O4

Keywords: factor reallocation; Great Recession (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-lab, nep-mac, nep-sbm and nep-tid
Date: 2018-11
Note: 2648086
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20182210

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